Selling related question

[wescobrk]

"Yeah, I don't think the "bet it all" should be taken literally - and I kinda doubt that even Rothstein did that - but it goes back to Munger/Buffett and how, when you are sure enough something is a really great opportunity and you've really done your homework, don't put 5% on it... Great opportunities don't come by everyday, so get the most of them.

 

At some point I think Buffett had 75% in GEICO..."

 

I remember seeing Warren and Charlie live (I don't recall the year) and Warren turned to Charlie and asked him if he ever put 100% in one security and Charlie replied, "it was more than 100%."

 

From what I have read and heard from Warren, he never exceeded the 75% level that he had in Geico (as far as in one company % of net worth).

[bmichaud]

Klarman said that he thinks Buffett is a better investor than he since buffett has a better eye for businesses. He has the ability to see these things coming before others, and he stays within that competence circle.

 

Perhaps.

 

I think Buffett's approach in terms of purchasing inevitables is that it makes it easier to be certain that you are getting a discount to intrinsic value.

 

Buying something that looks cheap but later isn't (because the business quickly declines)... isn't value investing.  This I believe is what Warren figured out a long time ago and why he went the way of inevitables or in other words businesses with very enduring characteristics.

 

Some value investors I believe think they are estimating intrinsic value but aren't, yet they do okay anyway because they have a selling disclipline.  In other words, they're out after the first large rally.  So they are trading volatility but don't recognize it as such.

 

One of the best posts I've seen on this board, Eric. Precisely my thoughts....except I can't/haven't articulated it that well. As they say, the sign of brilliance is the ability to explain a complex topic in simple terms - further evidenced by the fact that you are up 11x since early 2008!

[biaggio]

Ericopoly, Liberty, Planmaestro, et Al thanks for all the great posts.

 

I have saved that little clip of Rothstein for future reference.

 

When you guys find an idea that you have a lot of conviction in, selling at a deep discount (like you BAC, AIG buys) and say you would like to put say 25 or 50% of you equity in it, how do you do your buying? Do you average in over a small period of time-say 10% at a time, do you go "all in"?

 

I like what Howard Marks said- don t try to buy at the bottom as it is impossible- he said something like buy before the bottom, at the bottom and then after the bottom (as you will know the bottom price only in hind sight)

[ERICOPOLY]

Klarman said that he thinks Buffett is a better investor than he since buffett has a better eye for businesses. He has the ability to see these things coming before others, and he stays within that competence circle.

 

Perhaps.

 

I think Buffett's approach in terms of purchasing inevitables is that it makes it easier to be certain that you are getting a discount to intrinsic value.

 

Buying something that looks cheap but later isn't (because the business quickly declines)... isn't value investing.  This I believe is what Warren figured out a long time ago and why he went the way of inevitables or in other words businesses with very enduring characteristics.

 

Some value investors I believe think they are estimating intrinsic value but aren't, yet they do okay anyway because they have a selling disclipline.  In other words, they're out after the first large rally.  So they are trading volatility but don't recognize it as such.

 

One of the best posts I've seen on this board, Eric. Precisely my thoughts....except I can't/haven't articulated it that well. As they say, the sign of brilliance is the ability to explain a complex topic in simple terms - further evidenced by the fact that you are up 11x since early 2008!

 

My RothIRA is up 11x (well actually now it's 12x) since early 2008.  My taxable account -- you need to go back nearly two more years to get to 11x.  Since 2008 I've managed the accounts such that the RothIRA has done better than the taxable account (on purpose).

 

Anyhow, glad we're of a similar mind regarding the inevitables -- it's almost a tautology that in order to be resonably accurate about the future earnings (the intrinsic value) you need to have a highly predictable business (enduring / wide moat).

[bmichaud]

Either way 11x, 12x, roth, taxable....it's brilliant.

 

My guess is far fewer companies would even receive a bid on their equity if investors truly understood how strongly the terminal value decided current value - Apple for example, who know what it will look like in ten years, yet anyone who has owned it looks brilliant - we'll see in ten years...  Einhorn was buying Patriot Coal for example n 2008 and I believe it went up something like ten times - it's now $0 four years later. Was that a brilliant purchase back then because he was fortunate enough to get out before the market figured out it had little long-term value?

[Uccmal]

 

I remember seeing Warren and Charlie live (I don't recall the year) and Warren turned to Charlie and asked him if he ever put 100% in one security and Charlie replied, "it was more than 100%."

 

From what I have read and heard from Warren, he never exceeded the 75% level that he had in Geico (as far as in one company % of net worth).

 

Charlie took out a loan to buy British Columbia Power bonds and invested everything he had in it.  In the low millions, I believe.  Discussed in Alice's book.

 

 

 

[berkshiremystery]

 

I remember seeing Warren and Charlie live (I don't recall the year) and Warren turned to Charlie and asked him if he ever put 100% in one security and Charlie replied, "it was more than 100%."

 

From what I have read and heard from Warren, he never exceeded the 75% level that he had in Geico (as far as in one company % of net worth).

 

Charlie took out a loan to buy British Columbia Power bonds and invested everything he had in it.  In the low millions, I believe.  Discussed in Alice's book.

 

Actually it was British Columbia Power, selling for $19/share and being taken over by the Canadian government at $22/share,... so for this merger arb, Munger borrowed $3million to leverage up his returns on this “sure thing”.